Deal set to push probiotics firm into Japanese baby food market

By Jane Byrne

- Last updated on GMT

Related tags: Lactobacillus

Bio Gaia has signed an exclusive dealership agreement with Japan's largest food and supplement wholesaler in a move, the Swedish probiotics supplier said, will help open new markets such as infant formula for their probiotic ingredient.

Bio Gaia, which has had a sales office in Japan since 2006, said that the distributor, Nippon Access, is intending to build a supply chain in collaboration with day care centres and hospitals, and Bio Gaia products such as its probiotic straws and drops, are set to be the flagship elements of this new preventative health focus.

Peter Rothschild, president of the Stockholm-based company, which has a proprietary probiotic strain called Lactobacillus reuteri,​ told Nutraingredients.com that the Japanese market is competitive and a difficult one for a new entrant to navigate so leveraging the power of an established distribution network will aid future market penetration.

“We have been trying out different business models. A strategy that had focused on marketing our products via supermarkets has been abandoned in Japan in favour of pharmacy-sold supplements as it required a level of support we were unable to give,” ​he said.

Rothschild explained Nippon Access’s distribution network covers nationwide retailers and the wholesaler has the appropriate Japanese food manufacturer contacts and marketing know-how to assist Bio Gaia in gaining a foothold in the infant nutrition market there, which prior to this deal, had been proving difficult.

“The Asian market currently makes up 20 per cent of our overall sales value,” ​he continued, “and we see huge potential in Japan as most segments of the population are ready consumers of probiotics and ones who are willing to try out novel products but who have not really been exposed to much innovation in this category in recent years.

This is a factor we are hoping to exploit and in the longer term we will be looking to extend our range in that country to functional food, beverages and food targeted specifically at the elderly,”​added Rotshchild

Nippon Access is a subsidiary of Japan's fifth largest trading company, Itochu Corporation, which as part of their holdings has two convenience store chains with more than 15,000 outlets.

But Rotschild said a move into the convenience store category in Japan would be some time away as a Bio Gaia product would have to be developed specifically for that kind of retail positioning.

The Swedish company has for some time focused on new markets in regions such as the Middle East, Asia and Eastern Europe and Latin America - all of which continue to demonstrate growth, mainly in the probiotic tablets and drops usually sold under licensing agreement with local distributors.

Bio Gaia said the new distribution deal would not affect its agreements with companies such as Erina which markets its chewable tablets in Japan.

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